Suit to Remove PUC Commissioner Gets Attorney General’s Go-Ahead

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San Francisco Chronicle

Attorney General Bill Lockyer gave a Santa Monica watchdog group permission yesterday to file a lawsuit to remove one of the state’s five utilities commissioners because the official bought stock in a wireless company his agency regulates.

Lockyer concluded that Commissioner Henry Duque, a five-year veteran of the Public Utilities Commission, appeared to violate state rules by buying 700 shares last year in Nextel Communications, the nation’s fifth-largest wireless company, and may have to forfeit his office. The PUC code specifically bars commissioners from holding a financial interest in any company that agency regulates.

Therefore, Lockyer’s office found that a suit, filed by the Foundation for Taxpayer and Consumer Rights, would benefit the public interest. By law, the attorney general must screen efforts to force public officials from office to weed out frivolous complaints.

Pamela Pressley, an attorney with the watchdog group, said the organization will first ask Duque to resign before going to court. “We would like him to step down,” Pressley said. “Commissioners have to be absolutely neutral, and owning stock is a contamination of that faith.”

Duque’s attorney, Thomas Willis, said the attorney general’s opinion was just a superficial look at the case and didn’t consider all the issues involved.

“We are disappointed by the attorney general’s letter, but it doesn’t decide the legal issues,” Willis said. “We are confident we will prevail in court.”

Duque said in a sworn statement that he didn’t realize the purchase posed a potential conflict until a Chronicle reporter asked him about the matter in August. Wireless companies are not heavily regulated by the PUC, and Duque said he didn’t realize the company was involved in any continuing proceedings.

Furthermore, Duque pointed out that his stockbroker bought the Nextel stock on May 12, 1999, without consulting him first. Duque only found out about the purchase after he received a trade confirmation in the mail a few days later.

At that point, Duque called his stockbroker, Michael Golub, to ask him about Nextel. But Golub told him it was a mobile phone company regulated by the Federal Communications Commission, so Duque did not think it posed a problem, he recalled.

Duque points out that he sold the stock immediately after The Chronicle’s inquiry.

It turns out that Duque bought more stock than first thought. In August, Duque said he bought 250 shares.

But after reviewing his records, Duque found that his broker actually purchased 700 shares at that time. Duque’s broker then sold 100 of his shares on January 21 and another 350 shares on March 14. His broker then sold the remaining 500 shares, after a 2-for-1 stock split, on Aug. 18 for $27,800.

Duque appears to have made a significant profit because Nextel‘s stock soared 48 percent during the 15-month period. The stock price was even higher on Jan. 21 and March 14 when Duque unloaded some of his shares.

Consumer Watchdog
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